MILITARY SURVIVOR BENEFIT PLAN BENEFICIARIES UNDER INSURABLE INTEREST COVERAGE.

SEC. 643. MILITARY SURVIVOR BENEFIT PLAN BENEFICIARIES UNDER INSURABLE INTEREST COVERAGE.(a) Authority to Elect New Beneficiary.—Section 1448(b)(1) of title 10, United States Code, is amended—(1) by inserting “or under subparagraph (G) of this paragraph” in the second sentence of subparagraph (E) before the period at the end; and(2) by adding at the end the following new subparagraph:“(G) Election of new beneficiary upon death of previous beneficiary.—“(i) Authority for election.—If the reason for discontinuation in the Plan is the death of the beneficiary, the participant in the Plan may elect a new beneficiary. Any such beneficiary must be a natural person with an insurable interest in the participant. Such an election may be made only during the 180-day period beginning on the date of the death of the previous beneficiary.“(ii) Procedures.—Such an election shall be in writing, signed by the participant, and made in such form and manner as the Secretary concerned may prescribe. Such an election shall be effective the first day of the first month following the month in which the election is received by the Secretary.“(iii) Vitiation of election by participant who dies within two years of election.—If a person providing an annuity under a election under clause (i) dies before the end of the two-year period beginning on the effective date of the election—“(I) the election is vitiated; and“(II) the amount by which the person’s retired pay was reduced under section 1452 of this title that is attributable to the election shall be paid in a lump sum to the person who would have been the deceased person’s beneficiary under the vitiated election if the deceased person had died after the end of such two-year period.”.(b) Change in Premium for Coverage of New Beneficiary.—Section 1452(c) of such title is amended by adding at the end the following new paragraph:“(5) Rule for designation of new insurable interest beneficiary following death of original beneficiary.—The Secretary of Defense shall prescribe in regulations premiums which a participant making an election under section 1448(b)(1)(G) of this title shall be required to pay for participating in the Plan pursuant to that election. The total amount of the premiums to be paid by a participant under the regulations shall be equal to the sum of the following:“(A) The total additional amount by which the retired pay of the participant would have been reduced before the effective date of the election if the original beneficiary (i) had not died and had been covered under the Plan through the date of the election, and (ii) had been the 120 STAT. 2261 same number of years younger than the participant (if any) as the new beneficiary designated under the election.“(B) Interest on the amounts by which the retired pay of the participant would have been so reduced, computed from the dates on which the retired pay would have been so reduced at such rate or rates and according to such methodology as the Secretary of Defense determines reasonable.“(C) Any additional amount that the Secretary determines necessary to protect the actuarial soundness of the Department of Defense Military Retirement Fund against any increased risk for the fund that is associated with the election.”.(c) Transition.—(1) Transition period.—In the case of a participant in the Survivor Benefit Plan who made a covered insurable-interest election (as defined in paragraph (2)) and whose designated beneficiary under that election dies before the date of the enactment of this Act or during the 18-month period beginning on such date, the time period applicable for purposes of the limitation in the third sentence of subparagraph (G)(i) of section 1448(b)(1) of title 10, United States Code, as added by subsection (a), shall be the two-year period beginning on the date of the enactment of this Act (rather than the 180-day period specified in that sentence).(2) Covered insurable-interest elections.—For purposes of paragraph (1), a covered insurable-interest election is an election under section 1448(b)(1) of title 10, United States Code, made before the date of the enactment of this Act, or during the 18-month period beginning on such date, by a participant in the Survivor Benefit Plan to provide an annuity under that plan to a natural person with an insurable interest in that person.(3) Survivor benefit plan.—For purposes of this subsection, the term “Survivor Benefit Plan” means the program under subchapter II of chapter 73 of title 10, United States Code.